Energy and commodities finance house, Asia: Societe Generale

Energy Risk Asia Awards 2020: French bank’s renewables financing expertise puts it in prime position for winning landmark 2020 deals

Daniel Mallo, Societe Generale

Covid-19 inevitably caused disruption to the funding and development of energy and commodity projects this year, but it has also helped to accelerate the transition towards cleaner power in Asia.

And Societe Generale, with its deep expertise and experience of renewables financing, proved itself perfectly placed to help facilitate the shift. The French bank has been at the heart of several landmark financing deals in the region – most notably for offshore wind farms and the world’s first floating solar project.

SG has also helped facilitate major projects in the oil, natural gas and mining sectors, despite the challenges wrought by the pandemic.

But it is in the renewables sector that financing liquidity has held up especially well in 2020, says Daniel Mallo, Asia-Pacific head of natural resources and infrastructure at SG. Projects are benefiting from favourable government policies and fast-rising investor demand for green energy in the region.

Installed capacity of renewable energy in the Asia-Pacific region is set to expand by almost 58% between now and 2025, according to analysis by Rystad Energy.

Offshore wind power has arguably made the most impressive strides in the past 12 months. Outside China, this industry did not exist in Asia two years ago, Mallo notes.

Since 2018, SG has acted as either financial adviser or arranger for all four offshore wind project financings in Taiwan. The latest was completed in February 2020: the 589 megawatt (MW) Changfang & Xidao development, with a deal value of NT$90 billion ($US3.15 billion).

In Japan, Tokyo-based conglomerate Marubeni brought SG in as the only non-Japanese bank early this year to help fund the first large-scale commercial offshore windfarm in Japan. The French bank acted as senior lender in the ¥100 billion ($940 million) non-recourse project financing for the 140MW Akito & Noshiro projects.

SG is also advising on Vietnam’s first offshore wind project and talking to sponsors and local authorities about other debut developments in Australia, India and South Korea.

The bank is also at the forefront of an even newer trend in renewable power: floating solar farms. It acted as the lead arranger, technical bank and hedge provider for the NT$7.3 billion financing for the 181MW Changhua Floating Solar Project in Taiwan, the world’s first such development, which completed in April.

Takehiro Morino, a general manager in the power business department at Marubeni, the sponsor of the Changhua project, highlighted SG’s “professional and competitive edge” and is keen to partner again on future projects.

SG is also acting as a lead arranger on a 145MW floating solar project on the Indonesian island of Sumatra. It is currently under execution and targeting a financial closing in the first half of next year.

“My colleagues in Europe and New York were interested in learning from us about these deals, because they haven’t had opportunities like this,” says Mallo.

Floating solar is a form of power generation particularly well suited to Asia, and the region could lead the way globally for this asset class, he adds. It helps get around issues such as high population density in some of the more developed economies and complexities around land acquisition processes in emerging markets such as Indonesia.

While the renewables sector is a key focus in Asia, more traditional energy sources are still needed – and natural gas is one of the cleanest options.

SG helped refinance the Ichthys liquefied natural gas (LNG) project on the northern coast of Australia this year. It is one of the biggest LNG developments globally, with a total cost of around $37 billion. The $8.3 billion refinancing launched in January and closed in June to a tight timetable, despite the final credit process being hit by both the Covid-driven market turmoil and the collapse in oil prices in April, Mallo said.

Beyond the energy complex, SG worked on the acquisition of Australian gold miner Evolution Mining’s first overseas operation. In March, the bank helped arrange the A$1.1 billion ($757.7 million) and C$125 million ($92 million) debt financing supporting the purchase of the Red Lake gold complex in Western Ontario, Canada.